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JERUSALEM (AP) _ Israel held off on immediate retaliation Tuesday for a bus bombing that killed 14 Israelis, along with two attackers, but troops destroyed the homes of a suicide bomber and a suspected militant. It marked the first time in months that the Israeli military did not respond quickly to a major Palestinian attack.

Monday's actions complicated a new U.S. effort to end two years of Israeli-Palestinian violence. Prime Minister Ariel Sharon is under growing pressure to prevent an escalation in fighting as the United States courts moderate Arab countries in preparation for a possible U.S. strike against Iraq.

Israeli Interior Minister Eli Yishai confirmed that U.S. interests were being considered.

``There are those (in Israel) who say that we need to react now and immediately with all power and all force,'' he told Israel Army Radio on Tuesday. ``On the other hand, we could cause difficulties for the Americans. If the Americans attack Iraq, it's in our interest as well as that of the Americans.''

On Tuesday, Israeli troops in the Balata refugee camp destroyed the home of Ibrahim Naji, who blew himself up in an attack in Tel Aviv in July that killed five people.

In Kfar Salem near Nablus, soldiers demolished the two-story home of Mahmoud Issa, who was arrested by Israeli soldiers three months ago, witnesses said. The army said Issa, as a member of the Popular Front for the Liberation of Palestine, was responsible for organizing several attacks in which one Israeli was killed and more than 14 injured.

In Monday's bombing, the deadliest Palestinian attack in three months, a car stuffed with about 220 pounds blew up next to a bus in northern Israel, turning it into a huge fireball. Fourteen bystanders and two attackers were killed, and 65 people were wounded.

The attack, claimed by the militant Islamic Jihad group, came as Assistant Secretary of State William Burns was touring the region, planning talks Wednesday and Thursday with Israelis and Palestinians about a new U.S. peace plan.

Burns will not be deterred, said Paul Patin, a spokesman for the U.S. Embassy in Tel Aviv. ``We can't change directions every time there is a suicide bombing,'' Patin said, adding that the United States strongly condemned the attack.

Monday's explosion went off during afternoon rush hour, as the bus stopped on a highway near the town of Hadera to take on passengers. After the initial blast, more explosions went off as ammunition carried by soldiers on the bus blew up, witnesses said. Rescue workers stood by helplessly, unable to help most trapped passengers, as the flames reduced the bus to a charred mass of twisted metal.

The victims were badly burned, and by Tuesday, only four of the dead had been identified. Twenty-five people remained hospitalized Tuesday, including six who were in serious condition. One of those seriously hurt was a 2-year-old girl.

Islamic Jihad did not identify the assailants. However, there were reports that two residents of the West Bank town of Jenin, Mohammed Hassanein and Ashraf Al Asmar, both 18, had been missing for several days. Neither had known ties to Islamic Jihad, but it is customary for militant groups to recruit bombers in secret.

Relatives of Hassanein, a barber, and Al Asmar, who worked in his father's grocery store, removed belongings from the family homes Tuesday, saying they expected the structures to be razed by Israeli troops. Since July, Israel has demolished several dozen homes of terror suspects, including two houses that were leveled Tuesday near the West Bank city of Nablus.

The area of Monday's attack has been hit hard by Palestinian attacks. It is at Israel's narrowest point, less than 10 miles from the line between Israel and the West Bank, but near the Mediterranean coast.

On June 5, 17 people were killed in a similar attack at a nearby intersection, and Israeli security sources were quoted as saying that Eyad Sawalha, 30, an Islamic Jihad leader based in Jenin, was behind both attacks. Israel has searched for Sawalha for months. Israeli troops withdrew from Jenin last week.

Palestinian leader Yasser Arafat denounced the bombing. Israel held him ultimately responsible, saying his security forces have made no serious attempt to prevent attacks. The Palestinians say Israel's devastating military strikes have rendered their security forces powerless against the militants.

The bombing underscored the loss of hope that the fighting could be ended soon.

``We have become imprisoned in a monstrous labyrinth,'' commentator wrote Hemi Shalev in the Maariv daily. ``From a national perspective _ and from a personal perspective for many _ these are the most wasted years of our lives.''

The Burns mission, the first high-level U.S. mediation mission in months, was greeted with skepticism, since repeated previous attempts to bring about a cease-fire and renew peace talks have failed.

The U.S. envoy is seeking comment from both sides on a ``road map'' to Palestinian statehood by 2005. The plan has three phases, according to Palestinian officials, including the declaration of a provisional state in part of the West Bank and Gaza Strip, to be followed by talks on a final peace deal.

Mark Sofer, an Israeli Foreign Ministry official, said the bombing was intended to derail the Burns mission.

Palestinian Parliament Speaker Ahmed Qureia, meanwhile, said Arafat has formed a new Cabinet and would present it to the legislature next week. Qureia did not divulge names. Palestinian officials said on condition of anonymity that the council was unlikely to approve the new Cabinet since the list contained some officials from the previous Cabinet who have been accused of corruption.